Of the many things that effective leaders can do to reach their goals, properly identifying risks is one of them. Education is another. In this issue of Commentary, we look at how Coca-Cola identifies their corporate risks, and how they educate their people on risk management. Finally, we refer to resource rich research which provides access for you and your team to hundreds of papers and videos, to help you better manage risk.
A lot can be learned from those companies which have invested heavily in risk management. Amongst the notable commonalities of organizations with successful risk programs, is that the risk initiative is often driven by and endorsed by the CEO or another top leader. If the “tone at the top” sets risk management as a priority, there’s a good chance the rest of the organization will follow. In the video link (click here), Phil Maxwell, Director of Enterprise Risk Management at The Coca-Cola Company, talks about risk identification techniques and Coke’s approach to ERM education and training.1
Using Coke’s model for risk identification, what are the benefits from involving functional leaders from within the organization, i.e. from Finance, IT, Sales, HR, Operations, Legal, Regulatory etc. Well, primarily its ensuring that there is an enterprise-wide perspective on the risks of the organization. Leveraging the experience of functional leaders leads to a better understanding of risks throughout the organization. You’d be surprised with the simplicity- its people talking with people about their views on what can adversely impact the organization. Here are some of Coke’s techniques:
- One-On-One/ Workshops/ Surveys– Coke references several approaches- using a white board in think tank type settings; conducting a survey using technology tools; or one-on-one interviews. A hybrid approach is to create a cross functional team visiting groups throughout the organization, sharing different dimensions on the risk identification process. Either way, dialogue is important, i.e. people talking with people to share views on key risks;
- Involve Leaders– as mentioned, top people can sell the value of the process, and can share in the communication of the importance of risk management and risk awareness;
- Integrate with Strategic Planning or another important process– include identification of risk within an important, established process like Strategic Planning- senior people will actively participate if the exercise is perceived as enhancing the value of the organization, while adding to an established process.
Another related link on this topic is to the article “Engaging Management in Risk Identification Processes”2. (Click here).
Most organizations don’t have the training budget which Coke has. However, all organizations can create a fundamental set of principles for educating teams on managing risks. Coke approaches “Give me the Basics” via in-person training sessions for staff, and via E- Learning modules. Having a centralized strategy on education ensures consistency of messaging, common language, and helps define organizational culture. Most important is aligning messaging with the objectives of the organization. Coke offers “ERM 101….what is risk and why identify risks”, and they also offer more in-depth training, such as for: Business Continuity and Disaster Planning.
Directors Global can provide access to you on a wide array of research on specific topics, including on educating your team on risk management and on risk identification. (Click Here)
At Directors Global, we access many different world-wide resources on risk management, and we regularly connect clients and colleagues to resource rich sites, including on the subjects of risk identification and training your people. Please click here to speak to one of our staff, and we’ll connect you with specific information you might require to help you and your team manage risk better.
- North Carolina State University, September 27, 2016. Coke interview on engaging business unit leaders in the risk identification process. https://erm.ncsu.edu/library/article/risk-identification-and-risk-training
- North Carolina State University, August 2, 2016. Lockheed Martin interview on Engaging Management in Risk Identification Processes. https://erm.ncsu.edu/library/article/engaging-management-in-risk-identification-processes